FCC already have started stifling technology innovation and changing the Internet for the worse

Well, that didn’t take long. In fact, the new “Net Neutrality” rules (note the quotes) proposed by the FCC already have started stifling technology innovation and changing the Internet for the worse. And that’s just from the proposal. But don’t take my word for it. It’s so bad that a huge number of large and small tech companies have come together to oppose them. (Feel free to register your opinion in an email to openinternet@fcc.gov.)

According to the MIT Technology Review, venture capitalists already have started reining in investment in a large swath of startup companies and innovations — particularly those focused on video and those requiring low latency.

To quote from the MIT Technology Review story:

But if deep-pocketed players can pay for a faster, more reliable service, then small startups face a crushing disadvantage, says Brad Burnham, managing partner at Union Square Ventures, a VC firm based in New York City. “This is absolutely part of our calculus now,” he says.

Burnham says his firm will now “stay away from” startups working on video and media businesses. It will also avoid investing in payment systems or in mobile wallets, which require ultrafast transaction times to make sense. “This is a bad scene for innovation in those areas,” Burnham says of the FCC proposal.

So to make this point crystal-clear, the very notion that the FCC would make such an odious proposal to maintain an open Internet has had negative real-world ramifications.

The piece goes on to frame another view, in that some think the advances of the modern Internet are causing an onerous burden on the big ISPs:

Gillis Cashman, a managing partner at MC Partners in Boston, says it makes sense to charge extra to big content providers like Netflix, whose services at peak hours can sometimes consume more than 30 percent of total Internet traffic. Video is “significantly congesting these networks, and causing real issues for carriers where they have to spend a lot of money upgrading networks, and pushing fiber deeper into their networks,” he says. “There is currently no model for monetizing that required investment.”

In essence, he claims it’s a problem for the big ISPs to provide the service they’re paid by their customers to provide. In markets where they’re essentially monopolies or oligopolies. Despite the fact that Netflix and other large-bandwidth consumers have specific programs that significantly reduce long-haul bandwidth congestion and provide better service to the end user. These same big ISPs are crying poverty while collecting vast profits from favorable fees and ever-increasing broadband rates, yet they’ve refused to participate in solving these problems.

In fact, these same big ISPs also are intentionally causing congestion problems on their own networks to force the issue. Mark Taylor at Level 3 goes into much detail on this in his post last week. I urge you to read that post now, as he calls out six large ISPs, five in the U.S. and one in Europe, that are intentionally operating congested circuits to force capitulation from content providers. He declines to name the six but does note that “the companies with the congested peering interconnects also happen to rank dead last in customer satisfaction across all industries in the U.S. Not only dead last, but by a massive statistical margin of almost three standard deviations.”

Naturally, there are two sides to this story. You can draw your own conclusions.

Meanwhile, the cost per megabit of data transmission is the lowest it’s ever been, at least until tomorrow, when it will be still lower. Transmission costs will continue to plunge until we run into the limit of bandwidth available over a strand of fiber. We haven’t found that yet, and we won’t for quite some time. Upgrading networks to support higher bandwidth services does not require digging trenches and running new fiber anymore — it just requires new hardware at either end of the existing fiber. But even that seems to be too much for the big ISPs.

And yet, the FCC is well on its way to capitulating and letting the fox run the henhouse, and the threat of that already is causing fallout. One FCC commissioner has called for a delay on the new rules, and it seems that all we can do is hope for the best, try to educate our friends as to what’s at stake, and shake our heads in disgust over how we wound up this far down the creek, seemingly without a paddle.